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Sunday, August 11, 2013

Thailand: An economic overview

By John Shoane

Thailand is a place with diverse new business and a newly industrialized infrastructure. This year alone, the country’s Gross Domestic Product (GDP) rose by around 19%. As one of the fastest growing economies of Southeastern Asia, Thailand might just be the place to start your new business. 

Mostly, exports make up the business of Thailand’s economy and GDP. Although the economy is still vastly compromised of agriculture (around 60% of the total Thai population works in this sector and it is the biggest employer), other emerging industry that exports consumer goods is also beginning to become a big part of the overall economic scene.

The prime form of currency in Thailand is known as the Baht. Currency is available in denominations of 1-10 in coins, 20, 50, 100, 500, and 1000 Baht in notes. The Baht can be divided into 100 Satang, with Satang being available in coins worth 25 and 50 Satang each. Tourists and business people looking to make investments in the country must realize that cash is the most sought after form of investment, or the easiest way to purchase things within the country. This is especially true in rural areas. In the city ATMs are everywhere, while credit cards and traveler’s checks may be more readily accepted, though traveler’s checks are usually only used in hotels. As exchange rates fluctuate almost daily, it is important to check the exchange rates for your currency and plan ahead to take enough money before leaving home. The Baht has increased in strength dramatically over the last couple of years.

Real estate is another important economic factor, although there are many different restrictions dependent upon citizenship, investment already made in the country and actual properties and buildings versus land purchases. Foreigners who want to make a purchase of land in Thailand must first invest at least 40 million Baht in Government bonds and can only then purchase a small amount of land. They can, however, own apartment buildings, with no rights in regard to the land the building is located on.

The Bank of Thailand controls most of the investment rules in the country, working with foreigners and foreign political interests to help provide a financial stable environment in Thailand. There are also some foreign branches of banks in Thailand how ever they are restricted to only one branch in the entire country, HSBC recently closed their Thai operations saying that the Government restrictions where unbearable.

The Government has a massive influence, this even includes grossly corrupt policies across the board for the personal gain of the select few Government officials. The Bank of Thailand is not as independent as they are in the west, how ever they do set policy. The Board of Investment is the first stop for any serious investment in Thailand. They do offer a program where a local company can be owned by foreign corporations, how ever you must understand that there are minimum investments, note that millions of dollars are required and these are typically limit to exports companies only. 

Typically a foreigner can only own 49% of a Thai company and can not control it legally, however the foreigner can own preferential shares that effectively do this in a round about way with a Thai nominee.

About the author: John Shoane  lives in Bangkok writes about the latest developments in Thailand that effect foreigners on the Gogo Florist Blog.

 * Image License: Andrew Hux; CC BY-NC-ND-2.0